Spotify Limits Free Service Further, Possibly Heralding U.S. Launch… Again

In what is almost certainly a move designed to satisfy record labels that Spotify isn’t a substitute for buying tunes, the wildly-popular European music service has further restricted what its users can hear using its free version. Now, a new question has emerged about Spotify: If it ever does launch here, will it still be worth using?

The main reason Spotify has been so successful in Europe has nothing to do with its great design, P2P architecture, collaborative playlist sharing, or any of those other niceties. Its main attraction has always been that you can listen to whatever you want, whenever you want, forever, without entering a credit card number or being limited to a free trial, as U.S.-based subscription services have generally required.

Spotify cut back on that offer about a year ago, limiting new users to 20 hours of listening per month. Today, it went even further, announcing a second round of limitations. Starting on May 1, new users in every supported country will be able enjoy the free version of Spotify in its current form for six months, after which more complicated restrictions kick in.

“It’s vital that we continue offering an on-demand free service to you and millions more like you,” reads Spotify CEO Daniel Ek’s blog post, hinting at untapped markets. “But to make that possible we have to put some limits in place going forward.”

The basic gist here is that anyone who started using the free version of Spotify after November 1, 2010, will be limited to playing each track a maximum of five times, and their monthly listening will be limited to 10 hours per month. Here are the details in Ek‘s words:

New Spotify users will be able to enjoy our unrivalled free service as it is today for the first six months. As of May 1st, any user who signed up to the free service on or before November 1st 2010 will be able to play each track for free up to a total of five times. Users who signed up after the beginning of November will see these changes applied six months after the time they set up their Spotify account. Additionally, total listening time for free users will be limited to 10 hours per month after the first six months. That’s equivalent to around 200 tracks or 20 albums.

Users will still have to pay 10 Euro per month to access their Spotify on a mobile phone, eliminate ads from the service, maximize sound quality, and remove the new listening limits.

U.S. music fans have anticipated Spotify for well over two years now. As they’ve waited, the service has continued to change, and these new limitations mean that if Spotify does launch here, it will be very different than the service that originally attracted so much attention in Europe.

However, even a free Spotify with the above limitations would allow people to use the service for about a half hour per day. And, crucially, Ek mentioned nothing about requiring a credit card or terminating access completely after any length of time. As a result, this new, more-limited Spotify still could offer enough to make it the de facto method for sharing music on Facebook and other third-party social networks — the way it already is in Europe — which would help it spread like wildfire here, assuming it ever shows up here.

That day could be approaching, finally, again, as a result of these limitations, which would cap royalty obligations incurred by the service’s non-paying users.

However, if Spotify adds another big round of limitations following this one, its chances of causing a big splash stateside would appear to decrease significantly. Even this current round comes dangerously close to affecting the service’s allure. In other words, the extended saga of Spotify may have finally become a case of “now or never.”

When BMI was created, in 1939, ASCAP management was sure that the radio stations and the public would have ignored the new society. ASCAP had the best composer, the most popular tunes. Surely people would love to pay (much) more to get to hear those songs performed on air.

Turns out that it wasn’t the case. Yes, initially, BMI composers might have had less experience and clout, but the price tag was so much more competitive, that some radios embraced the new company. And much to ASCAP surprise, that meant that they had a competitor. Not before long this lead to BMI securing more and better composers, and becoming as important as ASCAP.

If people from these successful music platform realized that people want to listen to great music first, maybe they could negotiate a deal with cdbaby. “Discover new indie music: be the first in your neighbourhood to know about new bands worldwide” sounds as hip and cool tag as “All the Beatles for you, 24/7″.

Limitations added just to please the majors simply piss off the customers (the potential and actual ones). I wonder when someone will have the bright idea of following the obvious and logical path and change the rules of the game for good.